Health

Developing a Health Care System Benefiting All

Speech by Angel Gurría, OECD Secretary-General, delivered at the China Development Forum 2008

Beijing, March 23, 2008

Ladies and Gentlemen.

I am delighted to share with you some experiences on health care systems in OECD countries, which are facing some similar challenges to yours and may provide interesting insights for China.

Improving human health and providing access to affordable, high quality health care is a key concern of all countries. It is not only an ethical and social imperative; it is also a necessary ingredient for the sustainable long-term development of our economies and societies. Good health improves people’s wellbeing. Healthy workers are more productive and healthy students learn better. In many OECD countries, health care is one of the most important and dynamic growth sectors in the economy.

The OECD has identified health as one of its priorities. Thus, we have produced a large database on health status and quality indicators, developed guidelines for health accounting, and analysed the organisation and performance of health systems, including pharmaceutical pricing policies, long-term care, health workforce issues, prevention of diseases, and health information and communication technologies.

In my remarks, I would like to focus on three key health policy challenges: the improvement of our populations’ health status and the quality of care; the extension of coverage and equal access to health care for all; and finally, the sustainable financing of health care systems.

In OECD countries, health status has improved dramatically over past decades. Life expectancy at birth has increased from 68 to 78 years on average since 1960. Infant mortality today is seven times lower than it was then. The successful implementation of childhood vaccination programmes in OECD countries has largely eliminated certain targeted diseases. We have also seen major breakthroughs in prevention and treatment for conditions like heart disease, cancer, stroke and premature birth, to name just a few.

But there are still big differences both across and within countries in life expectancy and other health indicators. Quality service is also uneven and cost pressures are increasing. This means that more needs to be done.

The first challenge health systems face is to provide universal coverage and equal access to medical services for all. This challenge lies at the heart of health policy. Without effective health coverage, people have to pay for care out of their pockets. As a result, they may delay or forego necessary treatments, or when care is unavoidable, they risk becoming impoverished, especially by chronic diseases which require long-term care.

OECD countries are addressing this problem in different ways. A large majority of OECD countries grants universal access to publicly financed health services, but this is not the only model. Switzerland and the Netherlands, for example, have a universal mandatory private health insurance system with regulated competition across multiple insurers. Mexico encourages the uninsured population to take up voluntary insurance with an improved package of services; this is financed by a mix of individual premia and government subsidies to the poorest population groups.

Universal coverage offers health, but also financial protection. It promotes equitable use of health services and helps tackle poverty. It also promotes access to state of the art treatments and preventive services. But there are still inequities. Sometimes, these are due to user fees which lower-income groups cannot afford. In other cases, there are differences in the additional insurance coverage taken up on a voluntary basis across the population. As a result, certain population groups have better or faster access than others.

Only three OECD countries have not attained universal (or near-universal) health coverage yet. In the United States, 14% of the population has neither public nor private health coverage. Coverage in Turkey, according to our most recent data, was available for only two thirds of the population in 2003. And half of the Mexican population is not part of the social security system and this ‘uninsured’ population relies on poorer-quality medical services provided by state health facilities.

Our analysis shows that policy interventions can mitigate income-related inequities in access. In France, for example, publicly financed coverage of cost-sharing for the poor was introduced. This has considerably reduced a pro-rich bias in the use of specialist services. But it also imposed a large cost on the public budget and contributed to a growing deficit in the social health insurance system. In the United States, government financing focuses on the poor and the elderly. But public spending on health as a percentage of GDP is not lower than in many countries that provide universal public coverage. In Switzerland, the government subsidises premia to help people buy mandatory health insurance which has reduced inequities across individuals with different income levels. But the cost of the average public subsidy is over half the average premium.

Reinforcing investment in human resources, across geographical areas, is critical to achieving wide coverage of high-performing health systems. Rapid population ageing in many OECD countries is both increasing the demand for and reducing the supply of health professionals. Countries need to address the challenge of having an adequate health workforce, to coordinate human resource and migration policies, and to bring about a more efficient utilisation of skills.

A second policy area concerns cost pressures in the health sector and improving value for money. Health spending represents 9% of GDP on average across the OECD, and is well above 10% in 8 OECD countries. Across the OECD, health spending has doubled as a share of GDP over the past 30 years. While the pursuit of the latest advances in medicine explains most of this cost growth, growing demand from ageing populations plays an increasingly important role.

OECD countries have attempted to slow the growth of health costs with a combination of budgetary and administrative controls over payments, prices, and supply of services. But, ultimately, increasing efficiency may be the only way of reconciling rising demands for health care with the constraints on public financing. Often a change in the mix or in the allocation of health resources can increase productivity and improve outcomes without increasing costs.

Better methods of compensating providers can also work well. Across the OECD, countries have moved away from cost-reimbursement, which encourages inefficiency, towards payments related to the volume of care provided or the number of cases treated. This rewards productivity. Increasingly, hospitals are paid on the basis of one payment for each patient with a particular condition, rather than being reimbursed for each treatment or test the patient receives. But there is also the risk that hospitals may tend to classify patients as having more serious conditions than they really have.

Countries should thus aim to design payment methods with incentives to provide the right services at the right time, and reward suppliers who contribute to better health outcomes. France, Germany, Sweden and the United Kingdom, for example, offer bonus payments to suppliers who meet certain quality standards.

Demand management can also help. Nurses or General Practitioners can serve as gatekeepers, assessing need for treatment and directing patients to the most appropriate care provider. With the Internet, patients can be informed about the costs and expected outcomes for certain treatments. Cost-sharing should allow patients to benefit financially from making cost-effective choices.

The third and final policy area that should receive more attention is prevention. Many preventive services have the potential for improving health and longevity at least as much as curative services, at lower costs. Take for example the recent dramatic rise in obesity. Today, 15% of the adult population in the OECD area is obese, which raises the risk of chronic diseases all the way from diabetes to dementia. Another example is the use of tobacco. The reduction in smoking in most OECD countries has led to a decline in the incidence of lung cancer.

Yet, only a negligible proportion of health spending in OECD countries is explicitly directed towards prevention. And providers (both doctors and hospitals) are often not rewarded for successes in preventive services and treatments, even if these would reduce the need for expensive treatments later on.

Even if we know what works to improve the performance of health systems, this is not an easy task for policy-makers. Health policy decisions have considerable economic consequences and reforming the system can be extremely difficult, especially if the various stakeholders do not embrace reform. Given the speed of developments in medicine and the evolution of health-care goals, reform of health systems is necessarily an ongoing, iterative process.

Increasing value for money in health systems requires experimentation and performance measurement, using actionable and accurate indicators. Benchmarking within and across countries, and sharing information can help. Bringing experience, evidence and new ideas together, will help policy makers meet the challenges they face. The OECD stands ready to help China address its health policy challenges by sharing our own countries’ experiences and working together to find the most appropriate “Chinese” solutions.